London's Stockpile of Unsold Homes Jumps to an All-Time High

(Bloomberg) -- London's stock of completed but unsold homes has surged by almost half this year as Brexit uncertainty and affordability issues dog the housing market.

The number in the capital jumped to 2,374 units as of Sept. 30, the most on record and up from 1,595 at the end of 2017, according to data compiled by Molior London. The borough with the biggest stockpile is Wandsworth, an area that borders the River Thames, followed by Croydon, an outer borough in the south of the city.

“Some of this excess has built up because it's the wrong product at the wrong pricing for what people want to, and can afford to buy,” said Tim Craine, founder of the property research firm. “For the rest, it's a case of bad timing due to the lull in the market that's come about due to Brexit.”

Britain's housing market is slowing after a multi-year boom as the U.K.'s impending divorce from the European Union weighs on sentiment and prices remain out of reach for many potential buyers. It now takes the average Londoner 14.5 times their annual salary to purchase a home, the highest multiple ever, according to Hometrack.

Homebuilders fell on Tuesday, led by Barratt Developments Plc, which dropped 2.2 percent as of 10:59 a.m. in London, while Taylor Wimpey Plc slipped 2 percent. Both were among the 25 worst performers in the benchmark FTSE 100 Index. Crest Nicholson Holdings Plc fell 2.1 percent.

Overseas buyers from Asia to the Middle East piled into London property in recent years as a weak pound and price gains made the capital's real estate an attractive investment. Developers began building higher-end homes to capitalize on that demand, and many have been left holding empty units as foreign investment dwindles amid a rise in property taxes.

Asking prices for U.K. homes fell for the first time since 2011 in October, data from Rightmove show, with prices declining the most in the center of London. Asking prices dropped 0.2 percent overall, while in Greater London, they declined 2.4 percent annually. Homes located within London's Zone 1 area lost the most, with a 6.9 percent retreat on the year to an average of 1.3 million pounds ($1.7 million).

Read more:U.K. Housing Woes Deepen With First Asking-Price Drop Since 2011

To contact the reporter on this story: Sharon Smyth in London at ssmyth2@bloomberg.net

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Paul Armstrong

©2018 Bloomberg L.P.